- US retail sales – did shoppers spend big in December?
- Bank earnings across the pond off to a shaky start
- Will China hit its 5% growth target?
Bank earnings and the mood of US shoppers will grab the market’s attention this holiday-shortened week. US markets will stay closed today (15 Jan) as Americans celebrate the Martin Luther King holiday. China will also release full year GDP figures on Wednesday (17 Jan), with expectations pitched at 5% for 2023.
Here’s what you need to know to start your week.
US RETAIL SALES
Wednesday’s US retail sales data will be closely watched for indications that consumer spending - a major driver of economic growth - is remaining resilient in the face of elevated interest rates.
The Federal Reserve hiked rates last year in a bid to tame inflation but with price increases slowing, the potential pace of interest rate cuts this year, and whether the economy will avoid a recession, are the key questions hanging over markets.
Retail sales are expected to have risen 0.4% in December, after a 0.3% increase in November.
Data on housing starts and existing home sales are expected to point to a housing market that’s still struggling in the face of higher borrowing costs.
BANK EARNINGS
Bank earnings are set to continue with Goldman Sachs (GS:NYSE) and Charles Schwab (SCHW:NYSE) due to report on Tuesday and Wednesday respectively, after a mixed bag of earnings from big lenders on Friday.
Major US banks reported lower profits in a choppy fourth quarter clouded by special charges and job cuts, with signs an income boost from high interest rates is waning and some consumer loans are starting to sour. That said, the nation’s largest lenders JPMorgan Chase (JPM:NYSE), Wells Fargo (WFC:NYSE), Bank of America (BAC:NYSE), and Citigroup (C:NYSE) struck an upbeat tone on the economy, noting that consumers remained resilient even as defaults on consumer loans began returning to pre-pandemic levels.
Jamie Dimon, CEO of JPMorgan Chase, the biggest US bank and a bellwether for the economy, said consumers were still spending and that the markets were expecting a soft landing, but warned government spending could continue to push prices higher.
CHINA GDP
China is to release full-year GDP figures on Wednesday which will show how close the world’s second-largest economy got to realising the official 5% growth target for 2023.
A protracted property crisis, cautious consumers and geopolitical challenges are also pointing to another bumpy year ahead for China’s economy.
Even so, data from Statista shows China’s growth projection for 2024 of 4.16%, tapering to 4.12% in 2025. Yet this is still more than twice that of the US, which is forecasts to grow just 1.5% this year, versus a 2.8% average across G20 nations. In that context, 4%-plus in China looks pretty decent.
